Yes, in the short term, leasing does save you money, but only on the monthly payment.

When you buy, you’re obviously paying for the entire car, figuring you’ll get some money back when you trade it in. When you lease, all you’re paying for is the difference in the car’s value from the day you take it off the lot till the day you return it, plus interest and fees. (and part of that interest is figured on the entire value) No one is going to loan you a $20,000 car without paying interest on it for 2 or 3 years.

But, once the lease term is up, you’re back to having no car and you’ve got to start all over again. Oh, you could buy it instead of giving it back but you’ll wind up paying more than if you’d just bought the car to start with.

Once common on luxury cars, leases are becoming more common on non-luxury cars and even on cheap compact cars, according to analysts at Edmunds.com….plus many sales people push leases…makes their front end profit bigger. Folks who focus on payments, ie., lower payments are less concerned about how much they are really paying.

There is only one time when leasing make sense and that’s when you’re absolutely sure you’re not going to want to keep the car. Otherwise, buy it.